Money printing drastically reduced in 2022 - CBSL governor

The expansion of Central Bank’s monetary base or money printing drastically reduced in the first ten months of 2021 in comparison to the entirety of 2021, the Central Bank governor said today.

According to Dr. Nandalal Weerasinghe, the Central Bank has printed money to the tune of Rs. 341 billion in 2021. However, from January to October this year, the figure dropped to Rs. 47 billion.

In 2020, the monetary base expanded by Rs. 31.6 billion, the Central Bank governor added.

His remarks came during the media briefing to announce the 08th monetary policy review for this year.

Dr. Weerasinghe said the expansion of the monetary base has been decelerating due to the tightened monetary policy. Sri Lanka is now in a much more stable situation in terms of the monetary base expansion, he explained.

In response to a question on the impact of the tightened fiscal policy on the monetary policy, the Central Bank governor said a loose fiscal policy means that there will be more borrowings from the central bank and the banking sector.

He added that tightening of the fiscal policy helps the Central Bank to curtail inflation at a fast rate and reduce the demand for borrowings by the government.

The Central Bank governor said it would have been better if the fiscal policy was tightened much earlier. However, he said he is glad that it is happening now despite the delay.

Speaking on the debt restructuring discussions with bilateral creditors, Dr. Weerasinghe said good progress has been made.

The aim of going to the International Monetary Fund (IMF) board in December remains optimistic, however, if this opportunity is lost, the government hopes to do that in January. He also dismissed the reports on delaying it until March as “misleading”.

Meanwhile, Dr. Weerasinghe deplored the recent claims made by politicians on several occasions that the current Central Bank governor takes home a monthly salary of Rs. 2.5 million and a pension from the IMF. He said there is no truth to these claims.

He clarified that he only receives the pension entitled to a retired central bank official and the privileges entitled to the central bank governor.